*   Office of Inspector General
    Report of Audit
       Regional Laboratories
   Audit Report No. E1PMF6-05-0115-7100277
             August 20,1997

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Inspector General Division
 Conducting the Audit:           Northern Audit Division
                                Chicago, Illinois
                                Anthony C. Carrollo, Divisional
                                     Inspector General
                                Charles M. Allberry, Audit Manager
                                Janet G. Kasper, Team Leader
                                Jori L.  Spolarich, Auditor-in-Charge
                                Michelle L. Pienta, Auditor
Program Covered:               Regional Laboratories
Program Offices Involved:        Office of Regional Operations and
                                     State/Local Relations

                                Regions 1 through 10

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                    UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                   WASHINGTON, DC 20460
                                                                               OFFICE OF
                                                                          THE INSPECTOR GENERAL
                                      August 20, 1997
SUBJECT:   Audit Report No. E1PMF6-05-0115-7100277
             Audit of Regional Laboratories

FROM:      Michael Simmons
             Deputy Assistant Inspector General
              for Internal Audits

TO:          Mary Louise Uhlig
             Acting Associate Administrator for
              Regional Operations and State/Local Relations

Attached is the report on our audit of regional laboratories. The purpose of the audit was to evaluate
the planning and management of regional laboratories. We concluded that, along with other EPA
offices, the regional laboratories needed to improve the systems for planning, measuring, and reporting
on activities they performed in order to meet the requirements of the Government Performance and
Results Act. We also concluded that the laboratories needed a stronger shared identity and national
leadership.

ACTION REQUIRED

In responding to the draft report, your office provided corrective actions, with milestone dates, for
each recommendation. Therefore, no further response is required, and we are closing this report in our
tracking system.  Please track all corrective actions in the Management Audit Tracking System.

We have no objections to the further release of this report to the public.

We appreciate the cooperation you, your staff, and the regional laboratories provided during this
review. Should you or your staff have any questions, please contact Charles Allberry, Audit Manager,
Northern Audit Division, at 312-353-4222 or Richard Hall, Headquarters Liaison at 202-260-5563.

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                                                               EPA's Regional Laboratories
                             EXECUTIVE SUMMARY
INTRODUCTION
OBJECTIVES
RESULTS-IN-BRIEF
                           The Office of Inspector General (OIG) performed an audit of the
                           Environmental Protection Agency's (EPA) regional laboratories.
                           Although prior OIG reports have addressed the Agency's Office of
                           Research and Development laboratories, there have been no recent
                           reports concerning the management of regional laboratories.
                           The objectives of this audit were to:

                            •     determine whether improvements were needed in how regional
                                  laboratories' activities were planned and managed, and

                            •     identify areas where administrative processes among regional
                                  laboratories could be streamlined.
                           To meet the Government Performance and Results Act of 1993 (the
                           Results Act), EPA is taking steps to improve the processes for planning,
                           program evaluation, budgeting, and fiscal accountability.  The regional
                           laboratories' current processes will not be adequate to assist the Agency
                           in meeting the Results Act. Areas for improvement include: (1)
                           preparing performance plans, (2) measuring performance, (3) increasing
                           accountability, and (4) linking planning and performance to funding
                           levels.  See chapter 2  on page 5 for details.

                           EPA's regional laboratories need a stronger shared identity and more
                           active national leadership. Each regional laboratory has historically
                           operated independently of the others; however, there are many
                           similarities in their missions, goals, and contributions to the Agency. A
                           1994 EPA report1 (1994 Laboratory Study) recommended enhancing the
                           role of the "central  advocate" for the regional laboratories and re-
                           evaluating which organizational component should fill that role.
                           Although the Office of Regional Operations and State/Local Relations
                           (OROS/LR) was designated to perform this role, its ability to fulfill the
                           responsibilities had been limited.  The absence of a shared identity
                           among regional laboratories and the limited scope of national leadership
         Research. Development, and Technical Services at EPA: A New Beginning. Report No.
 EPA/600/R-94/122, July 1994.
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                                                               EPA's Regional Laboratories
                           have resulted in inefficient efforts to meet common needs.  See chapter
                           3 on page 13 for details.
AGENCY ACTIONS
OIG EVALUATION
                           The Acting Associate Administrator for OROS/LR stated that
                           OROS/LR and the regional laboratory managers have joined the Agency
                           in its efforts to understand and implement specific requirements and
                           goals of the Results Act. The managers recognize the importance of
                           both planning and accountability and will continue to bring their
                           processes in line with the requirements of the Results Act. Concerning
                           the concept of shared identity for the regional laboratories, OROS/LR
                           will work with the laboratories to achieve greater consistency and
                           effectiveness through more coordinated efforts.  As the current
                           reorganization of the Office of Administrator is completed, its regional
                           operations staff will  work to acquire the resources necessary to provide
                           strong national leadership for the broad scope of issues vital to the
                           regional laboratories. See pages 11 and 19 for specific actions the
                           Agency will take to address the findings and recommendations.
                           The Agency's actions, when completed, will address the findings and
                           recommendations in the report.
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                                                     EPA's Regional Laboratories
                             Table of Contents

EXECUTIVE SUMMARY                                                       i

ABBREVIATIONS                                                            iv

CHAPTERS

1     INTRODUCTION	1
           Purpose	1
           Background  	1
           Scope and Methodology	3
           Prior Audit Coverage	4

2     IMPROVEMENTS NEEDED TO MEET THE GOVERNMENT PERFORMANCE AND
      RESULTS ACT	5
           Government Performance and Results Act 	5
           Current Practices Need Improvement 	6
           Conclusion	11
           Recommendations  	11
           Agency Actions  	11
           OIG Evaluation  	12

3     REGIONAL LABORATORIES NEED A STRONGER SHARED IDENTITY AND
      NATIONAL LEADER  	13
           Shared Identity	13
           National Leadership	14
           Illustrations of Need for National Leadership 	16
           Conclusion	18
           Recommendations  	19
           Agency Actions  	19
           OIG Evaluation  	19

APPENDICES

1     OFFICE OF REGIONAL OPERATIONS AND STATE/LOCAL
       RELATIONS RESPONSE TO THE DRAFT REPORT 	20
2     DISTRIBUTION 	23
                                     in
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                                        EPA's Regional Laboratories
                Abbreviations

Government Performance and Results Act

Environmental Protection Agency


Research. Development, and Technical Services at EPA: A New
Beginning. July 1994, Report No. EPA/600/R-94/122

Office of Inspector General

Office of Regional Operations and State/Local Relations

Research Triangle Park
the Results Act

EPA

1994 Laboratory
Study
OIG

OROS/LR

RTF
                       IV
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                                                                EPA's Regional Laboratories
                                      CHAPTER 1
                                      Introduction
PURPOSE
BACKGROUND
Regional Laboratories
Sources of
Analytical Services
The OIG performed an audit of EPA's regional laboratories.  Although
prior OIG reports have addressed the Agency's Office of Research and
Development laboratories, there have been no recent reports concerning
the management of regional laboratories. Our  objectives were to:

 •    determine whether improvements were needed in how regional
       laboratories' activities were planned and managed, and

 •    identify areas where administrative processes among regional
       laboratories could be streamlined.
A regional laboratory is located in each of the ten EPA regions. The
laboratories provide a range of scientific and technical services for a
wide variety of customers both internal and external to the Agency.
Customers include regional program offices and state and local agencies.
The laboratories' mission is to: (1) provide quality scientific data, (2)
integrate laboratory activities with field and quality assurance partners,
(3) maintain a fully equipped laboratory, (4) maintain and enhance a
technically  and scientifically skilled staff, and (5) advance the Agency's
science agenda.

The focus of the regional laboratories is on  the application of science
policies and methods in support of regulatory programs, monitoring
programs, and special projects. The laboratories' main role is to perform
sample testing in support of various regional programs.  The regional
laboratories perform many special analytical services, which  include fast
turnaround  and verification analyses, nonstandard tests, and analyses
requiring low detection limits. Regional laboratories provide services
other than analytical support, including laboratory audits and
certifications, methods development, field sampling, consulting and
technical assistance, data validation, expert witness testimony, and
training.

EPA regions have three potential  sources of laboratory services.
The two main sources are the regional laboratories and the Contract
Laboratory  Program. As already mentioned, the regional laboratories
perform many special analytical services. The Contract Laboratory
                                             1
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                                                                EPA's Regional Laboratories
                           Program consists of a group of contractors that provides routine
                           analytical services in support of EPA's Superfund effort. Non-
                           Superfund programs may buy into these contracts if funds are available.

                           If a regional laboratory or the Contract Laboratory Program does not
                           have a certain capability, a region can obtain analytical  services from
                           private laboratories through blanket purchase agreements, regional
                           contracts, or small purchase requests. For example, because Region 4
                           and the Contract Laboratory Program cannot perform dioxin analyses,
                           Region 4 contracts out for these services.
Government
Performance
and Results Act
The Government Performance and Results Act (the Results Act)
was enacted on August 3, 1993, to provide for the establishment of
strategic planning and performance measurement in the Federal
Government. Other purposes of the Results Act include:

 •     initiating program performance reform by setting program goals,
       measuring program performance against those goals, and
       reporting publicly on their progress; and

 •     improving Federal program effectiveness and public
       accountability by promoting a new focus on results.

The intent of the Results Act is to change the  culture of Federal
agencies, from focusing on what agencies are  doing to what they are
accomplishing. Implementing the Results Act would improve agencies'
planning, budgeting, and accountability processes, linking them together
so that planning drives budgeting.  Actual program results could also be
monitored and used to influence future planning.

To achieve a strong link among planning, budgeting, and accountability,
the Results Act requires all agencies to produce strategic plans, annual
performance plans, and annual performance reports. An agency's
strategic plan will include a comprehensive mission statement and
general objectives covering the major functions and operations of the
agency. Annual performance plans will include objective goals and
describe the operational processes and resources required to meet the
goals.  Annual performance reports will assess the agency's performance
versus the established goals. The results will  be used as a basis for
future decisions on programs and budgets.
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                                                               EPA's Regional Laboratories
SCOPE AND
METHODOLOGY         Our audit focused on the regional laboratories' management and
                           administrative processes and the Office of Regional Operations and
                           State/Local Relations (OROS/LR) role as the central advocate for the
                           regional laboratories. We performed fieldwork in Regions 4, 5, 8, and 9;
                           and at OROS/LR. We also obtained data from the other six laboratories.
                           We conducted fieldwork between July 8, 1996, and June 13, 1997.

                           To accomplish our objectives, we reviewed applicable policies and
                           guidance and interviewed EPA officials in the regions visited and
                           OROS/LR.  As criteria, we used the Results Act, relevant EPA reports,
                           Office of Administration and Resources Management streamlining
                           guidance, and Office of Management and Budget information
                           management policies.

                           Our first objective was to determine whether improvements were needed
                           in how regional laboratories' activities were planned and managed.
                           Through reviews of documentation and discussions with laboratory,
                           regional, and OROS/LR officials, we evaluated the processes and
                           management controls used to plan, schedule, track, and report laboratory
                           activities. Laboratory activities include analytical tests, field sampling,
                           and laboratory inspections and certifications. We asked all ten regional
                           laboratories about their processes for scheduling, tracking, and reporting
                           activities, however we only requested data from the four regions visited.
                           We also reviewed all ten laboratories' processes for determining their
                           annual funding levels.

                           Our second objective was to identify areas where administrative
                           processes among regional laboratories could be streamlined including
                           equipment purchases, development of data management systems, and
                           standard operating procedures. To accomplish this, we asked laboratory
                           officials from all ten regions  about their process for planning equipment
                           maintenance and purchases.  We interviewed laboratory officials from
                           the four regions visited regarding their purchase and development of
                           data management systems.

                           We issued position papers to the regional laboratories and OROS/LR on
                           May 20, 1997. We met with both groups to discuss the position papers,
                           and incorporated their comments into the draft report. The draft report
                           was issued to the Acting Associate Administrator for OROS/LR on June
                           25,  1997. Comments to the draft report were received on July 29, 1997.
                           The comments were incorporated into the final report and included as
                           Appendix 1.
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                                                              EPA's Regional Laboratories
                          We performed our audit in accordance with the Government Auditing
                          Standards. 1994 Revision, issued by the Comptroller General of the
                          United States, and included such tests as we saw necessary to complete
                          our objectives.
PRIOR AUDIT
COVERAGE        There were no prior audits of EPA's regional laboratories related to the
                    objectives of our audit.
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                                                              EPA's Regional Laboratories
                                     CHAPTER 2
                       Improvements Needed to Meet The
                   Government Performance and Results Act
GOVERNMENT
PERFORMANCE
AND RESULTS ACT
                          To meet the Government Performance and Results Act of 1993 (the
                          Results Act), EPA is taking steps to improve the processes for planning,
                          program evaluation, budgeting, and fiscal accountability. The regional
                          laboratories' current processes will not be adequate to assist the Agency
                          in meeting the Results Act. Areas for improvement include: (1)
                          preparing performance plans, (2) measuring performance, (3) increasing
                          accountability, and (4) linking planning and performance to funding
                          levels.
Section 4 of the Results Act requires Federal agencies to prepare
performance plans and reports. By September 1997 and annually
thereafter, each agency is required to prepare a performance plan
covering the program activities set forth in its budget. These plans will:

 •    express objective, quantifiable, and measurable goals;

 •    establish performance indicators to be used in measuring or
      assessing the relevant outputs, service levels, and outcomes of
      each program activity; and

 •    provide a basis for comparing actual program results with the
      established goals.

The Results Act also requires that starting March 31, 2000, each agency
will submit an annual report on program performance for the previous
fiscal year.  The report will include the performance indicators
established  in the plan along  with the actual program performance
achieved as compared to the  established goals.  Also, where a
performance goal has not been met, the report will explain why the goal
was not met, the plans and schedules for achieving the goal, and whether
the goal is impractical or infeasible.

To help ensure compliance with the Results Act, EPA established a
Planning, Budgeting, Analysis, and Accountability process.  Among
other items, it included requirements for annual performance plans and
reports. While the regional laboratories are not required to prepare their
own plans and reports, they provide important services to the program
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                                                                EPA's Regional Laboratories
                           offices and need to improve their planning process as EPA implements
                           the Results Act. Consistent planning methods throughout EPA,
                           including the regional laboratories, will simplify preparation of the
                           Agency-wide annual performance plans and reports.
CURRENT PRACTICES
NEED IMPROVEMENT
Preparing Annual
Performance Plans
The Results Act requires strong links among planning, reporting, and
budgeting; and increased accountability.  To assist EPA in meeting these
requirements, regional laboratories, in conjunction with program offices,
will need to prepare annual plans with objective goals and performance
indicators and maintain consistent data on results. Regional laboratories
will then need to report to regional and program management on actual
achievements and costs versus projected levels. Lastly, the laboratories
will need to base the funding they receive on planned activities and
performance results.  Performing these activities will help the regional
laboratories and the Agency determine whether goals are being met and
resources are being used for priority activities.

Annual performance plans under the Results Act will include
objective goals and performance indicators.  According to a 1994 EPA
Subcommittee report2, regional laboratories generally lacked the
information required for effective planning.  Only four often regional
laboratories prepared work plans that included goals and indicators.
Identifying these elements in annual plans will provide the laboratories
with a basis to compare to results and determine if objectives are being
achieved.
                           In 1994, the Subcommittee identified a weakness related to planning
                           among the regional laboratories.  There was a general lack of readily
                           available information, particularly in the areas of resource management
                           and future program needs.  This information was required to effectively
                           plan for the future. The Subcommittee recommended that EPA develop
                           an integrated process to plan its future, and evaluate its current, science
                           and technical service requirements.  The ability to estimate current and
                           future needs would help the Agency develop performance plans. As of
                           June  1997, EPA had not taken action to address the recommendation.

                           Regional laboratories prepared annual plans with varying levels of
                           detail.
         Research. Development, and Technical Services at EPA: A New Beginning. Appendix F, "EPA Laboratory
 Study: BSD Evaluation - Cross-Agency Subcommittee Final Report", Report No.
 EPA/600/R-94/122, July 1994.
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                                                                EPA's Regional Laboratories
                            •    Half of the laboratories did not prepare written work plans.
                                 Officials said planning specific activities was difficult because
                                 the laboratories provided services in response to changing
                                 regional needs.

                            •    One laboratory prepared plans, but did not identify goals and
                                 indicators. The work plans included narrative descriptions of
                                 planned activities, based on regional priorities.

                            •    Four laboratories' work plans included goals and indicators.  For
                                 example, one region included the estimated number of
                                 inspections and investigations. Another region projected the
                                 work days required to complete certain numbers of activities,
                                 such as training and technical assistance.  The plans did not
                                 include estimated levels of analytical support the laboratories
                                 would provide, although this was one of the laboratories' major
                                 activities.

                          Regional and laboratory  officials said that it was difficult to develop
                          detailed  work plans because the regional laboratories provide a support
                          function and must react to changing program needs.  However, the
                          laboratories perform many of the same types of functions every year. As
                          a result,  laboratory officials can establish performance indicators and
                          goals for some activities, with the recognition that the laboratories also
                          fulfill special program needs that are not easily quantified.

                          Performance indicators are particular values or characteristics used to
                          measure or assess relevant outputs, service levels, and outcomes of
                          program activities.  Based on the audit, we identified two potential
                          indicators for the regional laboratories.

                            •    One indicator could be the number of analytical tests performed.
                                 Often regions, nine counted analytical activities based on
                                 analyses, which represented one sample through one instrument.3
                                 A corresponding  goal would be that the regional laboratory
                                 would perform a  certain number of analyses in a fiscal year.

                            •    Another indicator could be the number of laboratory audits.
                                 Regional staff audit contract laboratories to ensure they are
       3Even if an instrument simultaneously tests for a number of elements, the activity is counted as one analysis.
However, there could be more than one analysis for each sample.

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                                                                EPA's Regional Laboratories
Measuring Performance
Results Consistently
Increasing Accountability
Through Reporting
       properly analyzing samples. A related goal would indicate the
       number of audits the region planned to conduct during the year.

To compare actual results to established goals on a national basis,
the regional laboratories need consistent data on achieved performance
levels. Comparing results to goals for analytical support will be difficult
because some regions include different items in the counts of analytical
activity.  As a result, EPA will not be able to determine the national
performance level and whether the laboratories are meeting established
goals.

Laboratory officials included the standard analyses performed by
regional laboratory analysts in the analytical activity data.  Also, two of
the ten regions included certain types of quality control work in their
data; the other eight did not. Including quality control analyses adds
significantly to the total analyses. For example, Region 8 included
quality control work in its data.  In fiscal year 1996, Region 8's total was
over twice as high as Region 4's (see table 1). This occurred although
Region 8 had one of the smallest regional laboratories while Region 4
had one of the  largest, based on the number of regional full-time
equivalents.

            Table 1:  Regions Included Different
                     Activities in Data
Region
4
8
Includes Quality
Control Work
No
Yes
Total
Analyses
11,230
22,849
One method of measuring analytical activity is not recommended over
the other.  However, because of the differences in measuring, it would
not be possible for the Agency to compare data across the regions and to
calculate total analytical activities versus the projected level. The
regional laboratories need to determine a system for consistently
measuring analytical activities. This will allow determination of an
EPA-wide total and comparison of actual results to goals.

Accountability is a process for analyzing actual performance and
cost against goals and should focus  on the Agency's accomplishments
relative to the commitments made in the annual performance plan.
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                                                                EPA's Regional Laboratories
                           Regional laboratories would increase their accountability by preparing
                           annual performance reports that relate actual results and resources
                           expended to objectives.

                           Seven of the ten regional laboratories prepared activity reports and
                           submitted them to regional or program management. These reports
                           varied in terms of the information included.  Some of the reporting
                           regions compared actual accomplishments to planned activities, while
                           others only described completed activities. Five of the seven regions
                           included numerical data on the levels of actual or planned performance.

                           The three remaining regional laboratories did not report laboratory
                           activities to regional or program management.  Laboratory officials said
                           that some regional and program management did not request data on
                           actual levels of performance or resources used because they were
                           satisfied with the services provided. Also, the programs were not
                           concerned about the cost of services as long as analyses were performed
                           on time.  Staff members from one region said they had not submitted
                           reports since 1995 because management was more interested in
                           environmental results. In another region, the laboratory previously
                           submitted detailed quarterly reports to program managers.  Since the
                           managers provided little feedback, this practice was suspended.

                           The regional laboratories need to prepare performance reports to show
                           actual accomplishments and costs versus planned activities. Preparing
                           these reports will show whether the laboratories have met their goals and
                           where resources have been spent. Submitting these reports to program
                           and regional management will also increase the regional laboratories'
                           accountability.
Linking Funding to
Performance Plans
and Results
The Results Act emphasizes a strong link among planning,
reporting, and budgeting.  EPA intends that performance plans and
prior years' results, including resources used, will be the basis for future
decisions on programs and budgets. However, only three often regional
laboratories used planned activities and prior years' results as the basis
for their budgets, while seven based their budgets on historical amounts.
Laboratory officials said that they do not believe they have significant
input into how much funding they receive.  This occurs because regional
laboratories do not have a specific appropriation. Instead, they are
funded by other program offices or through the Regional Administrators'
offices.
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                                                                EPA's Regional Laboratories
                           In terms of basing budgets on historical amounts, an EPA report4 stated
                           that: "The budget process should avoid focusing decisions solely on the
                           margin of the prior year's budget because this discourages consideration
                           of significant change or major redirection."  As the laboratories and EPA
                           continue to implement the Results Act and prepare performance plans
                           and reports, the funding they receive should be based more on activities
                           and less on historical amounts.
CONCLUSION
RECOMMENDATIONS
                           The Government Performance and Results Act places new requirements
                           on Federal agencies for improving their planning, budgeting, and
                           accountability systems. Current regional laboratory practices will not be
                           adequate to assist the Agency in meeting the Results Act. The regional
                           laboratories can improve their planning processes by working with
                           program offices to prepare annual performance plans that include goals
                           and indicators and measuring performance results consistently. The
                           laboratories can:  (1) increase accountability by preparing annual
                           performance reports and (2) develop a stronger link between funding
                           levels and performance plans and results.  Performing these activities
                           will not only help EPA meet the Results Act, it will improve the overall
                           management of activities and resources at the laboratories.
                           We recommend that the Acting Associate Administrator for Regional
                           Operations and State/Local Relations work with regional laboratory
                           management to:

                           2-1.    Prepare, in conjunction with program offices, annual
                                  performance plans that include goals and performance indicators.

                           2-2.    Develop a system that all regions will use to consistently
                                  measure laboratory activities.

                           2-3.    Prepare annual performance reports that compare goals with
                                  actual accomplishments.

                           2-4.    Base funding levels on performance plans and prior years'
                                  results.
AGENCY ACTIONS
         Managing For Results. The Planning, Budgeting, and Accountability Task Force, February 23, 1996.

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                                                              EPA's Regional Laboratories
                          In responding to the draft report, the Acting Associate Administrator for
                          Regional Operations and State/Local Relations agreed with all the
                          recommendations and stated that the regional laboratories have taken,
                          and will continue to take, action to address the recommendations.

                          2-1.    The regional laboratories are working with the program offices,
                                 the Office of Planning, Analysis and Accountability, and the
                                 Office of Regional Operations and State/Local Relations to meet
                                 the requirements of the Results Act. The regional laboratories
                                 have developed an overall objective and sub-objectives, and are
                                 working on specific performance measures and a performance
                                 plan. The performance plan will be completed by the end of
                                 fiscal year 1998.

                          2-2.    The regional laboratories agree that a consistent measurement
                                 system should be developed, and the issue will be discussed at a
                                 meeting in September 1997. However, they believe that it is
                                 important to develop a system that is not only consistent and
                                 accurate, but also reflects other factors and assumptions that
                                 need to be considered when measuring the performance of
                                 regional laboratories.  A pilot evaluation system will be
                                 completed by September 1998.

                          2-3.    In accordance with the Results Act, the regional laboratories will
                                 prepare annual performance reports that will compare actual
                                 accomplishments with established goals. The first report is due
                                 March 31, 2000, which will address the accomplishments for
                                 fiscal year 1999.

                          2-4.    The regional laboratories anticipate that funding decisions will
                                 be based on accomplishment of goals as identified in
                                 performance plans. The full system for linking planning,
                                 budgeting, and accomplishments should be in place for the
                                 development of the fiscal year 2002 budget. Interim efforts will
                                 be made to assure maximum accountability.
OIG EVALUATION
                          The Agency's planned actions will address the recommendations.

                                     CHAPTER 3
                     Regional Laboratories Need a Stronger
                   Shared Identity and National Leadership

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                                                                EPA's Regional Laboratories
                           EPA's regional laboratories need a stronger shared identity and more
                           active national leadership.  Each regional laboratory has historically
                           operated independently of the others, however, there are many
                           similarities in their missions, goals, and contributions to the Agency. A
                           1994 EPA report5 (1994 Laboratory Study) recommended enhancing the
                           role of the "central advocate"for the regional laboratories and re-
                           evaluating which organizational component should fill that role.
                           Although the Office of Regional Operations and State/Local Relations
                           (OROS/LR) was designated to perform this role, its  ability to fulfill the
                           responsibilities had been limited due to resource constraints.

                           The absence of a shared identity among regional laboratories and the
                           limited  scope  of national leadership have resulted in inefficient efforts to
                           meet common needs.  Development of a data management system and
                           procurement of capital equipment are two examples of where
                           uncoordinated efforts caused duplication of effort. A stronger shared
                           identity and more active leadership would help the laboratories achieve
                           efficiencies from their collective efforts.

SHARED IDENTITY
                           Each of EPA's ten regional laboratories has historically seen itself as a
                           unique entity.  Laboratory officials have no responsibility to each other
                           or to a national level office within EPA. Instead, each regional
                           laboratory reports to its respective Regional Administrator.  At the same
                           time, regional laboratories share similarities in their  missions, goals, and
                           contributions to EPA.  Each provides a wide range of technical support
                           and assistance services to regional program offices, state and local
                           environmental agencies, and tribal units for use in environmental and
                           enforcement decision-making.  Specific activities include sample
                           analysis, method development,  and laboratory inspection and
                           certification.

                           Regional laboratories are not, and should not be, identical in their size,
                           structure, or method of delivering services. Geographic and program
                           variations mandate that each laboratory has the flexibility to meet unique
                           requirements.  However, the laboratories need to accept and embrace
                           that there are significant similarities in the functions they perform.  The
                           regional laboratories prepared a draft vision statement that indicated
         Research. Development, and Technical Services at EPA: A New Beginning. Report No.
 EPA/600/R-94/122, July 1994.

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                                                                  EPA's Regional Laboratories
                            that, more and more, solutions to environmental problems can be
                            achieved only through the collective efforts of all stakeholders.  A
                            stronger shared identity and national leadership will assist the
                            laboratories in considering not only their regional needs, but national
                            needs that can be met through coordinated efforts.
NATIONAL
LEADERSHIP             The laboratories continue to need stronger national leadership.6 In the
                            1994 Laboratory Study, EPA concluded that it needed to strengthen the
                            Headquarters advocacy for the regional laboratories.  This would, in
                            essence, place regional laboratories on a par with national program
                            offices. This organization would serve a two-fold role. First, it would
                            represent the regional laboratories within Agency-level issues. These
                            would include discussions concerning allocation of resources.  Second,
                            the organization would serve as a focal point for regional laboratory
                            functions. This would include identifying efficiencies related to
                            coordination of laboratory functions and encouraging cooperation
                            among the laboratories. However, according to EPA officials, the
                            expanded role EPA envisioned has not been fulfilled due to resource
                            constraints.

                            The 1994 Laboratory Study listed the following activities among the
                            central advocate's proposed roles:

                             •    provide consensus building for the effective and efficient use of
                                   resources to meet support requirements;

                             •    facilitate communications among the laboratories, the
                                   Administrator, and program offices;

                             •    ensure that senior management understood how the laboratories'
                                   mission integrates into EPA's overall scientific mission;

                             •    represent the laboratories during budget and strategic planning
                                   efforts; and

                             •    provide leadership for the laboratories promoting national
                                   consistency.
        6The regional laboratories have referred to this role as the "central advocate". However, in the context of
 this report, we will refer to it as "leadership" to better include all aspects of the envisioned role.

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                                                                EPA's Regional Laboratories
                           The study recommended that OROS/LR continue as the central advocate
                           with enhanced management and budget support.  However, according to
                           an OROS/LR official, it was not able to fulfill this enhanced role due to
                           limited resources. The OROS/LR's activities for regional laboratories
                           had been limited to budget justification and distribution of resources for
                           capital equipment.

                           The regional laboratory managers believe that stronger national
                           leadership is needed. The managers provided the following areas of
                           deficiencies which highlight the need for stronger leadership:

                            •     liaison between the laboratories and Headquarters program
                                  offices, resulting in less than full integration of the regional
                                  laboratories into the Agency's science program,

                            •     communication between Headquarters and the laboratories
                                  concerning emerging issues that may affect its operation and
                                  results in under-utilization of resources,

                            •     advocacy or leadership when budget and staffing levels are
                                  addressed,

                            •     promotion, at the national level, of the regional laboratories'
                                  functions and contribution to the Agency, and

                            •     recognition of the role that regional laboratories play in
                                  enforcement, monitoring, and agency initiatives.

                           OROS/LR is currently undergoing a reorganization and redefinition of
                           duties. As part of the reorganization, Agency management has decided
                           that regional laboratory leadership will remain  with the regional
                           operations staff in the Office of the Administrator.  As EPA implements
                           the reorganization, it needs to determine what role the regional
                           operations staff will perform.  In doing so, it is essential that the regional
                           operations staff provide stronger national leadership.
ILLUSTRATIONS OF
NEED FOR NATIONAL
LEADERSHIP
The absence of: (1) a shared identity and (2) an effective national
leadership have resulted in inefficient use of resources.  Attempts to
develop data management systems within regional laboratories and the
procurement of capital equipment are two examples of where national
leadership may have resulted in a more efficient use of resources. A
stronger shared identity and national leadership will assist the
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                                                               EPA's Regional Laboratories
                           laboratories in considering not only their individual needs, but how their
                           needs impact and overlap the needs of other laboratories.

Data Management         Each regional laboratory has independently purchased, or
Systems                   developed, its own data management system.  While actual use varied,
                           each laboratory's data management system had the capability to perform
                           some similar functions. In 1992, EPA's Research Triangle Park (RTF)
                           and regional laboratories attempted to develop a common system that
                           would address the core needs of all of the laboratories. However, in
                           spite of its efforts and investments, EPA does not have a data
                           management system which meets the laboratories' needs.

                           The RTF system was designed to contain a core set of functions that all
                           of the laboratories needed such as project management, sample tracking,
                           and analysis scheduling. The data management system was provided to
                           interested regions. However, only a few regions adopted it as the others
                           felt the system was not adequate.  Some of the regional laboratories felt
                           that this system did not meet the needs already met by current systems,
                           was not user friendly, and that it had flaws.  For example, the system did
                           not: (1) meet biologists' needs, (2) electronically transfer data, or (3)
                           generate reports. As a result, regional data management needs have
                           been met through several different efforts.

                           A comparison of Region 5's and 9's systems shows the variations in how
                           the systems are used and the related costs.

                            •     Region 5 uses its system to track workload, track samples,
                                  generate reports, and upload information from instruments.
                                  Region 9 currently only uses its system to log in samples.

                            •     Region 5 obtained its system at no cost from RTF. Region 9
                                  purchased a commercial system for about $10,000.

                            •     Region 5 had recently modified its system to expand its
                                  capabilities.  Region 9 was hiring computer  support to learn the
                                  capabilities of its system.

                           The comparison of the systems shows the differences that exist
                           throughout regional  laboratories.  Both regions spent time and  resources
                           trying to get a reliable system in operation. A stronger national
                           leadership would prevent further duplication of effort in the purchase,
                           development, or modifications of systems needed to meet the regional
                           laboratories' core needs. This leadership could facilitate communication


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                                                                EPA's Regional Laboratories
                           among the laboratories to determine the universal needs for a system,
                           capabilities that had already been developed, and on-going regional
                           developments. Coordination of data management system development
                           would result in a more consistent national process for tracking
                           laboratory activities.
Equipment Purchases
CONCLUSION
Regional laboratories' capital equipment purchases were made based on
regional rather than national needs.  As a result, regional laboratories
have the potential for inefficient use of equipment resources.  If
equipment purchases were better coordinated, regional laboratories
could reduce the potential for purchasing equipment that would not be
fully used.  EPA and the regional laboratories have also recognized the
need for better coordination, but have not taken action to improve it.

While OROS/LR was responsible for ensuring proper use of the capital
equipment funds, it did not centrally manage the equipment purchases,
nor did it require the regional laboratories to submit information on
planned purchases and the rationale for those purchases. In December
1996, the OROS/LR began developing a tracking system to show
equipment purchased since 1992.  An OROS/LR official stated that
requiring laboratories to  submit the information increased their
accountability for the funds. However, OROS/LR's tracking system
only identifies past equipment purchases and does not account for
planned purchases. As a result, the current method of tracking will still
not prevent regional laboratories from purchasing duplicate equipment
that will be underutilized.

Regional laboratories have recognized that there may be a more efficient
way of using equipment. A draft vision statement for the regional
laboratories indicated that the regions would coordinate workload,
equipment, and expertise among themselves to assure the most efficient
and highest quality service. Under this vision, regional  laboratories
might use equipment resources more efficiently through coordination of
equipment purchases.  National leadership for the regional  laboratories
could help the regional laboratories identify a better way to use
resources to meet support requirements. This leadership could bring the
laboratories together to recognize there are commonalities in their work
and that they can provide support not only to their regions but also to
each other.
                           EPA's regional laboratories need a stronger organizational identity and
                           national leadership.  Each regional laboratory has historically operated
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                                                                EPA's Regional Laboratories
                           independently of the others, however, there are many similarities in
                           terms of their missions, goals and contributions to the organization.  The
                           enhanced national leadership role EPA envisioned is currently not being
                           fulfilled. A stronger shared identity and national leadership could help
                           regional laboratories improve coordination of their activities to reduce
                           duplication of effort and achieve efficiencies in the use of resources.
RECOMMENDATIONS
AGENCY ACTIONS
OIG EVALUATION
                           We recommend that the Acting Associate Administrator for Regional
                           Operations and State/Local Relations:

                           3-1.    Work along with the regional laboratories to complete their
                                  efforts to develop a common vision and mission statement.

                           3-2.    Work with regional laboratory management to identify the
                                  appropriate responsibilities for the national leader.
                           In responding to the draft report, the Acting Associate Administrator for
                           OROS/LR agreed with the recommendations and described actions to
                           address the recommendations.

                           3-1.   The regional laboratory vision and mission statements should be
                                  completed by January 1998.

                           3-2.   During the current reorganization, OROS/LR discussed with the
                                  Regional and Deputy Regional Administrators and regional
                                  laboratory directors the specific responsibilities for the national
                                  leader. Within one month of finalizing the reorganization plan, a
                                  work plan will be developed to reflect regional operations staff
                                  activities in support of regional laboratory operations.
                           The Agency's planned actions will address the recommendations.
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                                                                 EPA's Regional Laboratories
                                                                                      Appendix 1
                                                                                      Page 1 of 3
              UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                WASHINGTON, B.C. 20460
                                                          Office of Regional Operations
                                                            and State/Local Relations
MEMORANDUM

DATE:          July 29, 1997

SUBJECT:      Response to the Draft Audit Report No. E1PMF6-05-0115, Audit of
                Regional Laboratories

FROM:         Marylouise M. Uhlig
                Acting Associate Administrator

TO:            Michael Simmons
                Deputy Assistant Inspector General for Internal Audits

        On behalf of the Regions and OROS/LR, I want to thank you for the opportunity to review the
Draft Audit Report No. E1PMF6-05-0115, Audit of Regional Laboratories.  Charles Allberry, Audit
Manager, Northern Audit Division and his staff conducted a highly professional review of the planning
and management processes of the Regional laboratories.  Evaluations of this kind are very useful to
management serving as important tools in our efforts to improve and streamline operations.

        The Office of Regional Operations and State/Local Relations (OROS/LR) and the Regional
Science and Technology (RS&T) Managers have joined with the Agency in its efforts to understand and
implement the specific requirements and goals behind the Government Performance and Results Act
(GPRA).  We recognize the importance of both planning and accountability and will continue recent
ongoing efforts to bring our processes in line with GPRA requirements.  Supporting the concept of a
shared identity for the Regional laboratories, the Regional Operations Staff will work with the Regions to
achieve greater consistency and effectiveness through more coordinated efforts across the Regional
laboratories.  As the reorganization of portions of the Office of the Administrator, including the Regional
Operations Staff (ROS), is implemented, the ROS will work to acquire the resources (FTE) necessary to
provide strong national leadership for the broad scope of issues vital to the Regional Science and
Technology organizations.


       Note: The original response was signed by Bettina B. Fletcher for Marylouise M. Uhlig.
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                                                                 EPA's Regional Laboratories
                                                                                      Appendix 1
                                                                                       Page 2 of 3
        In response to your specific recommendations, we offer the following comments, planned
 corrective actions and time frames for accomplishing these remedies.

Recommendation 2-1

        The Regional laboratories are working with Program components, the Office of Planning,
Analysis and Accountability, and OROS/LR to meet the requirements of GPRA. The RS&T
organizations have developed an RS&T Objective under Agency Goal 8, Sound Science, and a draft
Profile Planning Baseline to accompany the Objective. Also, an RS&T GPRA Workgroup comprised of
representatives from each RS&T, have developed Sub-objectives that further define the RS&T Objective
and provide specific Performance Measures.  The RS&T GPRA Workgroup will continue to respond to
all Agency GPRA requirements for implementation. The next step will be the development of the
Performance Plan with Goals and Performance Indicators. The time frame for complete implementation
of this recommendation according to the Agency's GPRA schedule will be the end of FY 1998 for FY
1999.

Recommendation 2-2

        The RS&Ts have had numerous discussions concerning the issue  of measuring laboratory
activities consistently across the Regions.  The RS&Ts agree that a consistent measurement system
should be developed and this issue  will be on the agenda for the fall RS&T meeting in September, 1997.
However, the RS&Ts believe that it is important to develop a laboratory activities measurement system
that is not only consistent and accurate, but also reflects numerous other factors and assumptions which
impact any algorithm used to measure laboratory performance. Sample matrix complexity, programmatic
requirements, temporal sample loading patterns, data quality objectives (e.g. from enforcement-quality
requirements to initial site screening), appropriate quality assurance levels  all significantly impact the
number of samples analyzed by a laboratory.  A mechanism to measure Regional laboratory activities,
including consideration of the additional factors, will be prepared for pilot evaluation by September,
1998.

Recommendation 2-3

        In accordance with GPRA, the RS&Ts will join the Agency in preparing annual Performance
Reports that compare actual accomplishments with established goals.  Laboratory performance will be an
important element of these reports.  The first steps in this process have already been taken with the
development of the RS&T Objective, Sub-objective and Performance Measures under GPRA.
Implementation of this recommendation will follow the Agency  GPRA requirements with the first
Annual Performance Reports due March 31, 2000 addressing accomplishments for FY 1999.

Recommendation 2-4

        The RS&Ts anticipate that funding decisions will be based on the accomplishment of Goals as
outlined in their respective Performance Plans.  Performance Plans with their Performance Indicators will
be incorporated with the Annual Performance Reports and Program
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                                                                   EPA's Regional Laboratories
                                                                                        Appendix 1
                                                                                         Page 3 of 3
Office guidance concerning areas of investment and disinvestment to establish outyear funding
requests. Implementation of this recommendation will follow the Agency schedule which calls for
the completion of Annual Performance Reports by  March 31, 2000 addressing the accomplishments of
FY 1999.  Accordingly, the full GPRA system to link planning and budgeting should be in place for the
Regional laboratories for development of the Agency's FY 2002
budget.  Interim efforts will be made to assure maximum accountability of Regional laboratories as
rapidly as possible.

Recommendation 3-1

        OROS/LR is actively engaged with the RS&T managers to complete development of a common
vision and mission statement for the Regional laboratories.  The vision and mission statements will be
discussed with Senior Regional management as well as Headquarters Program Offices to assure that there
is a shared understanding and support for the functions which the Regional laboratories can and should
provide for the Agency. We anticipate that the vision and mission statements should be in place by
January, 1998.

Recommendation 3-2

        OROS/LR, in the context of recent Office Reorganization activities, initiated a dialogue with
both the RS&T managers and Regional and Deputy Regional Administrators concerning the
specific responsibilities for the national leader of the RS&Ts. The need for improved coordination
among Regional laboratories for greater efficiency and effectiveness is recognized and will be
incorporated in the activities of the successor organization, the Regional Operations Staff (ROS) The
scope of the functions which can be carried out will be dependent upon the staffing levels which can be
established for this activity.

        OROS/LR's has a long history with the Regional laboratories; this experience and expertise will
continue through the Regional Operations Staff. There is a strong commitment on the part of the Office
of the Administrator, including the Regional Operations Staff, to provide the National leadership to the
Regional laboratories to maximize their ability to support the Agency's mission for protection and
improvement of public health and the environment. As soon as the Office of the Administrator
Reorganization is finalized, a work plan will be developed for Regional Operations Staff activities in
support of the RS&T operations. This work plan will reflect discussions with RS&T managers, Regional
Administrators and Deputy Regional Administrators and will define the responsibilities of this National
leadership role. The draft workplan will be developed within one month of the completion of the
Reorganization.
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                                                              EPA's Regional Laboratories
                                                                                Appendix 2
                                                                                Page 1 of 1
                                     DISTRIBUTION

Headquarters

Acting Associate Administrator for Regional Operations and
 State/Local Relations (1501)
Assistant Administrator, Office of Research and Development (8101)
Audit Followup Coordinator, Office of the Administrator (1104)
Agency Followup Official (3101)
 Attn: Assistant Administrator, OARM
Agency Followup Coordinator (3304)
 Attn: Director, RMD
Associate Administrator for Congressional and Legislative Affairs (1301)
Associate Administrator for Communications and Public Affairs (1701)
Headquarters Library (3404)

Office of Inspector General

Inspector General (2410)
GAO Issue Area Planner
Divisional Inspectors General

Regional Offices

Regional Administrators
Regional Laboratory Directors
Regional Libraries
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